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Manage holiday spending

STILLWATER — In just a few weeks’ time, the holiday season will be in full swing across Oklahoma and the rest of the nation. But, let’s face it, spreading tidings of great joy isn’t necessarily cheap, and the desire to do so often outdistances even the most robust bank accounts.

So, what’s the secret to fully enjoying — and surviving — this special time of year without going bust?

“Set a budget, make a list and, as difficult as it may be, stick to both,” said Sissy Osteen, Oklahoma State University Cooperative Extension resource management specialist.

During the holiday season, people tend to primarily spend money on travel, gifts and entertaining, said Osteen, and if people want to head home for the holidays, they are going to do so, almost regardless of cost.

“Expenditures on gifts and entertaining can be more fluid,” said Osteen.

However, establishing a framework for spending — and adhering to it — is much easier said than done. Osteen noted that people spend an average of $600 to $1,200 on holiday gifts. That breaks down to $50 to $100 a month earmarked just for gifts carved out of a monthly budget that could already be stretched tight, especially given the ongoing economic challenges facing the state and the nation.

The reality is that consumers rarely set aside dollars for holiday expenditures as part of their regular budgeting activities throughout the year. In fact, more than half of the respondents to a recent myFICO survey indicated that they do nothing to prepare for additional holiday bills. Nevertheless, Osteen said consumers know what they want to spend on gifts and entertainment for the holidays, and do so whether they have the money or not.

“The holiday season is full of tradition. A lot of these practically dogmatic things we do for the holidays will put pressure on consumers. It’s also a highly emotional time of year, and different people react differently to that emotion,” she said. “Approaching the season in an organized and structured manner will go a long way toward helping consumers manage their spending during what can be a very challenging time of year.”

For those planning to entertain, figuring out how many will be in attendance and determining how much money to commit to the event will lay the foundation for creating a solid budget.

As for how to handle gift giving, if people are skilled at a particular craft then making presents instead of purchasing them is a viable option, Osteen said. Coupons for services like mowing the lawn or babysitting also are a good idea, especially for kids. Or, families can forgo the traditional gift exchange entirely and focus on enjoying the chance to spend quality time together.

When consumers do make the decision to join the mass of shoppers looking for that perfect gift, Osteen suggested they set a personal goal not to use credit.

“One of the biggest pitfalls for consumers during the holidays is charging purchases without properly tracking the transactions,” she said. “By the time they realize they’ve overspent, it could be January or February.”

That rule of thumb applies more loosely to those who are good at tracking their purchases and who can pay off the entire amount on the next billing cycle. In fact, although incentive cards generally have higher interest rates associated with them, Osteen said they are good bets for consumers who fit in this category because they will get something out of that activity. But, if the plan is to pay off the balance slowly, using a credit card with a lower interest rate is a more sound strategy.

Regardless of the type of credit card used, it’s important to write down every expense in a check register or separate notebook, she said. Recording those transactions will give consumers an idea of how much they actually spent.

For people who do end up overspending, and find themselves knee deep in bills after ringing in the New Year, the first step is to formulate a plan for paying for credit purchases and re-establishing a monthly budget.

“If you need help making a plan, go to a nonprofit credit counseling agency. They are usually sponsored by the United Way and their services are free,” said Osteen, who noted that even as consumers recover from holiday sticker shock, it is an opportune time to begin planning ahead for next year.

One easy strategy for consumers interested in building a stash of holiday cash before next season is to look at how much they spent during the immediately previous holiday, and then decide how much they want to spend during the upcoming one.

“That can be put in a budget just like any other expense,” said Osteen. “When the holidays roll back around, you’ve got the money set aside for that purpose.”